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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: goldsnow who wrote (43304)	10/18/1999 11:33:00 PM
From: Hawkmoon	Read Replies (3) \| Respond to of 116759

goldsnow, That's the problem with CBs. They seem to care less when pricing power plummets (yeah.. they'll reduce interest rates from time to time if their arms are twisted) and deflationary pressures take hold. But let prices return to whence they were previously and they suddenly start b*tching and moaning about inflation. The real problem is how they deal with inflation. Had AG raised interest rates in October and gone neutral with the bias, things would be much more stable right now. He could have even raised them a full 1/2 point citing a preemptive strike, seen the market get pounded a bit, but then confidence would resume. It is the anticipation of higher rates constantly badgering the markets that creates such instability, not the actual raising of them. There has been an argument that the Fed is becoming irrelevant with its FOMC meetings and the market is better able to decide exactly where interest rates should be. It is always better to overreact a bit with regard to interest rates so that the market can say "whew.. ok that hurt, but it's over with for awhile and the Fed has done what needed to be done" instead of creating an environment of "death by a thousand cuts". I tend to think the Fed is unable to act in a decisive manner until faced post facto with a problem. They should be more proactive and if they find themselves second-guessing themselves they could always retreat from either their tightening or easing policies. What the Fed did at the last meeting was the worst of all worlds and they should be ashamed of themselves. In this new era of FED transparency, they left nothing but uncertainty in the wake of their last market. It is the same problem that the Japanese pursued during the '90s in limiting the amount of stimulus they injected into their lethargic economy. They incrementalized their policy, creating the belief that deflationary pressures would continue. And people adjusted their buying decisions accordingly leading to even lower prices. So yes, everyone is suddenly worried about the US economy and the weakness of the dollar. Yet, this very worry exacerbate the problem as people start going to cash and selling dollar denominated assets. I may be wrong, but I'm looking for a bit of a rally tomorrow should the CPI figures hold nothing out there as a surprise. The dollar index has been on the rise all day long. charts.quotewatch.com We'll see. Regards, Ron